Lahore: The Pakistan Credit Rating Agency Limited (PACRA) has upgraded the rating of Gas and Oil Pakistan Limited (GO) following a strategic partnership with Aramco, which has acquired approximately a 40% stake in the company. This partnership is anticipated to significantly impact both the operations of GO and the dynamics of Pakistan’s Oil Marketing Company sector.

GO operates an extensive network of approximately 1,293 retail outlets, with 55 being company-owned and company-operated. Eleven of these sites have been rebranded under the Aramco name. The company also boasts the second-largest storage capacity in the sector, with around 205,038 metric tons, and generates revenue through hospitality services.

Despite facing challenges from lower volumes due to weak demand and regulated pricing of petroleum, oil, and lubricants (POL) products, the company has stabilized its business and financial risks. GO’s management of marketing initiatives and sustained growth in topline and profits are expected to maintain stable cash flows.

The equity injection by Aramco, through a rights issue, has enhanced the company’s financial stability. This move has also streamlined working capital challenges, with considerable supply credit now available from Aramco, reducing GO’s reliance on borrowings. The improvements in financial footing have bolstered coverage ratios, providing a financial cushion.

The upgraded ratings are contingent on sustaining the current growth trajectory, aided by the association with Aramco and the realization of governance and control measures.